This column is a continuation of my review of recently passed state laws and how they will affect Southern Nevada homeowners associations. I will devote my next several columns to this topic.
Senate Bill 280 will significantly impact the financial operations of our communities. The first part of this new law allows lenders to establish escrow accounts that could be used to impound HOA assessments. I would have jumped up and down with joy if the law stated that all lenders must impound association’s assessments in the same way they escrow property taxes and insurance. That would have stopped all of this nonsense of superliens and lawsuits.
We need to push next legislative session to require all lenders to impound associations’ assessments and send them directly to the HOAs.
The next part of this law will definitely prolong the collection process of an association trying to collect its delinquent assessments. It says an association may not mail a delinquency notice or take any collection action for a past-due assessment any earlier than 60 days after it has become past due. The notice must include the assessments and fees, repayment plan and a notice of the right to contest the fees and assessments at an executive hearing. For many associations that do not hold monthly meetings there may be increased costs from property management companies for attending more meetings, and increased room-rental costs.
Wait until you read Assembly Bill 273. It amends Nevada Revised Statutes 116.31162, and further restricts the collection process with additional laws that prohibit an association from completing a foreclosure against a delinquent homeowner. I will talk more about this in an upcoming column.
The law also includes a modification to the home’s resale package, stating an association may charge a unit owner a fee not to exceed $20 to provide the information in an electronic format.
Other fee changes are: 1) statement of demand cannot be later than 10 days after receipt of a written request; and the association shall furnish the statement at a fee of no more than $150, and an additional fee of no more than $100 within three days after receipt of a written request.
The statement of demand must include the amount of the monthly assessment, any unpaid obligations, including management, transfer, foreclosures and attorney fees, fines, penalties, interest and collection costs. Either the buyer or the seller pays for these fees, depending upon the sales agreement.
I understand why many legislators believed that the collection/delinquency process should be changed but it would be a breath of fresh air if they would take the time to research the issue. Associations do not want to foreclose on homes; associations do not want to own the homes. Consequently, associations send two to three letters to the delinquent homeowner before the delinquent account is even transferred to the collection company.
When you combine SB280 with AB273 along with AB321 (the homeowner’s bill of rights, pertaining to lenders) and add the nine-month superlien priority/late/collection costs with the new Clark County transfer fees (now based on the market value of the home and not based on the amount of money owed by the homeowner to the association), you have created an economic monster because it will cost the association more money at a time when it is receiving less funds.
Bottom line: Who gets to pay to subsidize the delinquent homeowners? You guessed it; the homeowners who pay on time each month.
Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of H&L Realty and Management Co. Questions may be sent to Association Q&A, P.O. Box 7440, Las Vegas, NV 89125. Fax is 702-385-3759, email is firstname.lastname@example.org.